China Life Says Profit to Double as Stock Returns Assist Rebound

Jan 27, 2014 3:25 pm ET

Jan. 28 (Bloomberg) -- China Life Insurance Co., the nation’s biggest insurer, said estimated profit for last year may jump by about 120 percent from a low base in 2012, aided by higher investment income. The forecast fell short of the 164 percent gain analysts predicted.

Net income was 11.1 billion yuan ($1.84 billion) in 2012, the company said in a statement to the Hong Kong stock exchange yesterday, without giving the profit number for last year. A 120 percent increase would suggest profit of about 24.2 billion yuan, trailing the 29.6 billion yuan median estimate of 13 analysts surveyed by Bloomberg News.

“It’s lower than market expectations,” said Olive Xia, a Shanghai-based analyst at Core Pacific-Yamaichi International Ltd., citing a stock-market decline in the fourth quarter as a possible reason. “It could have a negative impact on investor sentiment as the company isn’t showing much improvement in fundamentals either.”

China Life returned to profit in the third quarter from a year earlier as a stock-market rally amid the nation’s economic recovery boosted investment returns. The Beijing-based company wrote off 31.1 billion yuan in 2012 to absorb declines in the value of its equity holdings following declines of about 20 percent in the benchmark Shanghai Composite Index in the preceding two years.

Shares of China Life, which is scheduled to report full- year earnings on March 26, slipped 2.9 percent to HK$21.80 yesterday and are down 10 percent in 2014. China Pacific Insurance Group Co. said Jan. 26 that profit last year may rise about 80 percent from a year earlier, citing better investment returns.

--Zhang Dingmin. Editors: Tomoko Yamazaki, Nick Gentle